Data, online delivery and the quest for continuous e-commerce improvement

During the session during The Delivery Conference 2024 in London, one could hear echoes of the famous quote, commonly attributed to Albert Einstein (the first written evidence pointed to Narcotics Anonymous Basic text) that the definition of insanity is doing the same thing over and over again and expecting different results.

During a diverse and insightful day of presentations from retailers and parcel carriers on February 6, one of the consistent themes was how the retail industry can better leverage data and technology to continuously improve the delivery experience for consumers.

Instead of, for example, repeating bad experiences with home delivery again and again, or seeing margins continually shrink due to rising levels of customer returns, many retailers are looking at the possibilities of emerging technologies that will take the delivery sector in a better direction.

Gary Page, general manager for delivery and customer collection at John Lewis Partnership, asked: “As we look to the future, how can we learn and learn from our mistakes?

“How do we use data to teach us when something goes wrong, how do we react to it, learn from it, and do something different to make sure it doesn’t happen again the next day? Or maybe we get a good response to the delivery… how do we learn that and apply it to the next experience?”

For many people in the room, artificial intelligence (AI) holds great promise in supporting the learning process. In particular, at electricity supply company Hived, work is underway to use artificial intelligence to improve several elements of its services.

Murvah Iqbal, founder and co-founder of Hived, said: “Maybe you live in an apartment building in London and sometimes (finding) a delivery address is quite difficult.

“So one of the things we do is we deliver to the same block three times a week, but it’s not the same driver (…) we take the data from the driver who delivers fastest and make sure that the next delivery the driver pretending to be to this apartment building has the appropriate data to get there.”

Another key area for Hived, Iqbal added, is how AI can improve routing intelligence: “It’s something we get so many data points from, minute by minute – how can we further manipulate that data to make better decisions routing decisions, and then specifically analyze that data and learn how we can provide more proactive updates to customers.”

It’s incumbent on the broader industry to work together to solve this problem, Page said, adding: “There is a huge opportunity for us to learn from this information and work together to share it between retailers and carriers to (get to) the 99.9 level % customer success.”

The report prepared by the consulting and research company Retail Economics in cooperation with the company running The Delivery Conference, Auctane, was published during this event.

The E-commerce Delivery Benchmark Report 2024 surveyed 8,000 consumers about their delivery preferences. Key findings include that 80% of shoppers would like to receive at least four updates on every online order, while 38% would value daily updates that would provide them with detailed information on the location and progress of their package.

However, many online retailers are failing to meet this demand, with two-thirds of companies in the study failing to meet customer expectations, providing updates only after orders have shipped, if at all.

The report highlights how retailers are most likely to consider using artificial intelligence (AI) to support their delivery propositions. The most popular feature identified was sending order and delivery updates (31%).

Managing returns and exchanges (28%), finding product information before making a purchase (26%), and answering general questions about a retailer or brand’s offering (21%) are other delivery functions where retailers are most likely to want to implement AI like results from research.

Sweating existing assets

The challenge of retail returns and how technology can help solve it has already been discussed at length, and the topic of tackling this margin-eroding element of e-commerce was brought up again at the Delivery conference.

H&M and Zara are among retailers that have recently started charging consumers for online returns, recognizing the additional operational costs associated with reverse logistics within their businesses.

Lucy Matchett, manager of the retail and leisure team at consultancy OC&C, said she expected more retailers to introduce triggers or develop their online offerings over the next 24 months to deliver more economical returns.

“It’s time to take a critical look at this element of the value chain,” she said. “Seeing more (apparel retailers) introducing fees (for returns) seemed like a watershed moment for the industry. Return fees challenge the conventional wisdom that you must have universal returns.

Richard Lim, founder of Retail Economics, said that “retailers’ margins are under so much pressure”, suggesting that they are using free returns periods as a “new value proposition” as opposed to standard practice.

However, the report shows that consumers are increasingly realizing that they can’t just have everything for free. Some 67% of respondents said they expected free returns, which, while still significant, represents a 13% year-over-year decline in sentiment.

Instead, out-of-home (OOH) returns are gaining momentum, with 30% of consumers preferring in-store returns and 25% preferring collection/drop off locations. Perhaps because of this growing interest in using OOH in online shopping, multi-channel retailers are increasingly willing to use their stores as part of a broader e-commerce strategy.

Page said, for example, John Lewis sees an economic benefit from a retailer’s perspective in customers picking up their online orders in store.

“It’s becoming more and more attractive now,” he explained. “If you go to our checkout, click and collect is set as default and this helps us attract more customers to our proposition.”

He added that there has been “natural growth and use” of click and collect since the start of the year as consumers perceive it as convenient, but that targeting online shoppers in this way offers several business advantages to the retailer.

The growth of Click & Collect in 2024, he continued, will be supported by consumers’ growing willingness to use lockers to collect and return goods. The click-and-collect service is about 15 years old but is “continuously evolving,” he said, as new technology and retailer margins demand.

To quote Einstein, this time from a letter to his son in which he made a popular comparison: “life is like riding a bicycle – to keep your balance you have to keep moving”, and the Delivery Conference showed that retailers and carriers continue to evolve through the use of new technologies and the use of online triggers, which is good for both customers and business.